THE BIGGEST SECRET HOW INSURANCE COMPANIES EARNS AND SURVIVE
1. Premiums from
their policy holder or customers.
2. Revenue by
investing the premium in the market.
As we all know that the insurance companies charge a certain
amount monthly or yearly for their services and policies. After that they
invest the premium in various markets like share market and earn from the fluctuations
of the market and they also invest in real estate market and earn profits and
rental income in that.
The insurance is all about risk coverage . Most of them are
not able to pay huge amount for car damage or not able to pay large sum of
money for treatment of their diseases so to cover all of their risks they take
insurance. After taking the insurance their risks become the risks of insurance
company so they charge premium for the coverage of risk.
For every business profit plays the most important role. In Insurance
profit have the same role. They get income from receive from investments and
premium return. Their main expense is the payment of insurance claims . For
example WELLPOINT which is the biggest
name in health insurance companies made about $58 million in revenue from
collected premiums in 08. The amount of health benefits paid to customers in the year was about $43 million, which means a
profit of $15 million (approx).
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